When the Military Fires Missiles They Go BOOM, Not BOON

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On November 8th, I had the pleasure of attending a professional
football game in Jacksonville, Florida. The Jaguars were playing
the Kansas City Chiefs and it so happened that on that very Sunday
it was Military Appreciation Day at Jacksonville Municipal Stadium.
There were hundreds of soldiers in fatigues, officers, and the whole
shebang.

Prior to the beginning of the game they had a presentation by the
military displaying the flag of the United States and a fly over
of a B-2 bomber, each of which cost approximately $2.1–2.2
Billion. The halftime show consisted of 150 teenagers on the 50-yard
line enlisting and swearing their oaths to the Military Industrial
Compl-oops, the Constitution, by repeating the General who was leading
the recitation.

It's no wonder we are such a militaristic society, it is indeed
hard not to fall prey to the propagandized displays of enormous
flags (made in China perhaps?) and $14,000/hr
(approximately in 2005 Dollars) flyovers of bombers that can carry
nuclear weapons that can annihilate entire countries. It does get
to your head when at every break in a professional football game
you hear about how great our military is and how we are so thankful
for their protection of our freedoms in Iraq and Afghanistan.

Before I finish this personal experience and get to my point I
would like to share one thing. There was an incredibly touching
moment when a soldier stationed in Iraq was on the big screen talking
about his family and the football team of his native city of Jacksonville.
He got a loud pop from the crowd which proceeded with the cameramen
showing this soldier's family on the big screen where even more
applause ensued. However, what truly made this a great moment was
that as the family was waving to the crowd in the end zone, out
comes this soldier supposedly speaking live from Iraq running into
the field. Once his son caught sight of him it was one of the most
emotional scenes I have ever experienced and a type of happiness
that cannot often be shared by so many thousands at once, rejoicing
at this little boy's love for his father and how happy he was to
see him home. I turned to my brother who was at the game with me
and asked him, now imagine if they brought them all home?

I would like to direct my attention now to the topic at hand. I
have heard this line being pushed on people by several news organizations;
economists and the like all parrot the phrase that any war or its
effort is a boon to the economy. It is here where my title comes
in handy because it is not a boon at all but it should rather be
said that it is a boom to the economy which is analogous to what
a target looks like after this sound is heard in a battle. Therefore
with any war effort you can hear the proverbial missiles being targeted
towards the private economy and its consumer goods and demands.

It is true indeed that productivity goes up and unemployment may
go down when a nation is engaged in a full-scale war. Output does
increase, but the output being produced is not the same output that
would have been produced absent the war. It is clear to see the
difference by simply looking at our own Nation during World War
II.

Many economists and college professors and establishment historians
espouse the same message by saying that WWII helped the country
get out of the depths of the depression along with Government stimuli,
but the focus here will be on the "war effort" as a boon
to the nation's economy. What follows is purely an economic analysis
of WWII.

With the onset of the US involvement in the war, Government expanded
at a rate that surmounted any previous growth (Great Depression
aside). It simply became involved in all aspects of the individual's
life, moral and societal behavior. This expansion led to a surge
in demand for positions within the bureaucracy of the Federal Government.
Many were employed. Those previously unemployed were required to
help in any way to provide for the needs of the country and its
military fighting overseas.

The Government also employed millions of able-bodied men to fight
for the nation. Factories were re-tooled to build all the necessary
war machines, planes, tanks, and jeeps. Shipyards were retrofitted
to accommodate the construction and assembly of large naval vessels
to patrol the seas. The demand in raw materials was exponentially
higher and all resources were reallocated towards the war effort.
Women, teenagers and the elderly replaced 29% (1) of the pre-existing
labor force that was drafted into the service at some point during
the war. The country was at constant production, real GDP growth
was at 13% (1) per annum during that period! This short summary
in anyone's view can propose a positive outlook on how the war did
aid the country by creating jobs and helping jumpstart a depressed
economy. However one must take a step beyond the conventional wisdom
and ask him or herself, "but at what cost?"

The claims that the above was a "good" thing are questionable
since war regardless of victory or loss is never good for a country.
Let's analyze the first point relating to the surge in Government
jobs and the expansion of the federal Government's size. In any
nation's economy, there needs to be a balance, a ying and a yang
just as in any other aspect of life. You cannot have too much of
one thing and too much of another. This leads me to the point that
as the Public sector (Gov't) grows and expands it crowds out any
private sector growth. It sucks up the resources that would otherwise
be readily available to work in the private sector into its vacuum.
Resources that could have created innovations, invented new processes
are now working in an environment conducive of routine non-creative
work that produces zero goods or products that may improve standards
of living.

It is morally devious to claim that unemployment went down during
the war effort as productivity went up and jobs were created. This
statement completely ignores the fact that in conjunction with the
aforesaid, millions were drafted into the war effort and killed
overseas. This would of course lead to lower "unemployment"
numbers.

Resources were reallocated to the war effort. This simply means
that instead of these goods being put to productive measures in
society they were being utilized en masse for the murders of millions
of others. Not only was this a detriment to the private sector it
is destruction of wealth as natural resources and goods that the
nation possesses were squandered and entirely lost which led to
massive waste. How are destruction of resources and capital ever
a good thing for a society?

Therefore the resources that go toward the improvement of the standard
of living of a society diminish in availability as it is crowded
out by the demand imposed via the war. Factories that were once
focused on consumer goods and electronics, vehicles, and other machinery
are no longer actively producing such items. The private sector
now must perform the same amount of work with less available capital
which inevitably led to shortages and Government rationing. Life
did not get better as individuals had to make do with a limited
availability of goods that were heretofore abundant.

Additionally a labor force of experienced able-bodied men was now
overseas fighting for their lives and in their stead were women,
teenagers and the elderly. How can this possibly mean that productivity
was higher? This meant that housewives had to work for a living
because their husbands were off fighting the war. Most women had
no prior experience of manual labor and work, and neither did the
teenagers. This ensured that training was required to get this new
inexperienced workforce up to par with the previous one. Also from
a moral standpoint, the stay at home mother now was required to
go to work which slowly ate away the very fabric of family this
nation was built upon and it set major societal precedents for the
future.

The number of men that could have otherwise been in the country
creating innovations, inventions, producing goods, engaging in entrepreneurship,
creating new jobs and businesses were now engaged in a valiant but
unproductive effort economically speaking. The domestic economy
suffered from this. Instead of coming up with ideas for business
ventures or new processes, such men were just trying to stay alive
and many of them perished. No one knows truly how much invaluable
personal and material wealth the country lost during that period
of time.

Meanwhile we are supposed to believe that when the original labor
force of men returned home the government's numbers of real output
decreased by 22 percent (1). During that time the nation was told
that once all men were to return and the war would end that the
country would spiral into another economic bust since military spending
would be slashed (hence the 13% GDP during the war years as Gov't
expenditures account for a high percentage of GDP calculations).
Of course official numbers would lead one to believe that 1946,
the year immediately following the end of war was abysmal. This
is pure nonsense since wealth originates in the private sector and
during that year the Government itself was cut in size considerably,
finally loosening its tight grip around the neck of the private
economy. This resulted in a true boon to the economy once all controls
were removed.

If war truly creates prosperity through sales of munitions and
war materials, why not engage in continuous full-scale war since
that would most certainly guarantee unending prosperity. The country
could hold hands together and jump for joy as to how much wealthier
we are by devoting precious resources to the production of things
that will ultimately be destroyed. The country should also engage
in the destruction of entire towns and razing of cities so they
can all be rebuilt and generate new shovel-ready public works programs!
The possibilities are endless!

I write this article amidst the beating drums of war towards Iran
that seem to be getting louder and louder. In this current economic
crisis perhaps the old line of "war creates jobs" may
be once again heard around the nation by pundits and pedagogues.

November
27, 2009

Born in Brazil, David Klein [send
him mail
] is a graduate from the University of Central Florida
school of Business. He is currently working in the energy industry,
and is a student of the Austrian School of Economics.

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